nep-neu New Economics Papers
on Neuroeconomics
Issue of 2016‒11‒13
four papers chosen by

  1. Cognitive Impairment and Social Security's Representative Payee Program By Anek Belbase; Geoffrey T. Sanzenbacher
  2. Maternal Education, Parental Investment and Non-Cognitive Characteristics in Rural China By Jessica Leight; Elaine M. Liu
  3. Complex Decision Making: The Roles of Cognitive Limitations, Cognitive Decline and Ageing By Michael P. Keane; Susan Thorp
  4. Myopic misery: Maternal depression, child investments, and the neurobiological poverty trap By Strulik, Holger

  1. By: Anek Belbase; Geoffrey T. Sanzenbacher
    Abstract: Social Security’s Representative Payee Program allows one individual to receive benefits on behalf of a retiree or disabled person who is incapable of managing them. In the case of retirees with cognitive impairment, the program could help prevent fraud by ensuring that Social Security benefits are immediately turned over to a capable individual. This paper seeks to answer three questions about the Representative Payee Program and its relationship to cognitive impairment. First, what share of individuals with cognitive impairment use a representative payee? Second, if individuals with cognitive impairment are not using a payee, what are they doing instead? Finally, is it possible to identify recipients with cognitive impairment who have no help managing their finances (through a representative payee or otherwise), a situation that makes them especially vulnerable to fraud?
    Date: 2016–11
  2. By: Jessica Leight (Williams College); Elaine M. Liu (University of Houston)
    Abstract: This paper evaluates the parental response to non-cognitive variation across siblings in Gansu province, China, employing a household xed e ects speci cation. The non-cognitive indices are de ned as the inverse of externalizing challenges (behavioral problems) and internalizing challenges (anxiety and withdrawal). The results suggest that there is signi cant heterogeneity with respect to maternal education; educated mothers compensate for di erences between their children, investing more in a child exhibiting greater non-cognitive de cits, while less educated mothers reinforce these di erences. Most importantly, there is evidence that these investments lead to the narrowing of non-cognitive de cits over time for children of more educated mothers.
    Keywords: non-cognitive characteristics, parental investment, intrahousehold allocation
    JEL: I24 O15 D13
    Date: 2016–08
  3. By: Michael P. Keane (University of Oxford and University of South Wales); Susan Thorp (The University of Sydney)
    Abstract: We review evidence on decision making in complex choice situations – i.e., situations where there are many alternatives and/or where attributes of alternatives are difficult to understand. We focus on choices about health insurance, health care, and retirement planning, all of which are very important for the well-being of the elderly. Our review suggests that consumers in general, and the elderly in particular, have great difficulty making optimal choices in these areas. They often behave in ways that imply a high degree of “confusion,” such as (i) failure to understand key attributes of alternatives, or (ii) inadequate cognitive capacity to process payoff relevant information. We go on to discuss extensions to standard rational choice models that account for consumer confusion. These include allowing perceived attributes to depart from true attributes; the use of heuristics; and inattention or procrastination. Such departures from rationality can be moderated by cognitive ability, age etc. We hope that these new models may be useful in designing paternalistic interventions.
    Keywords: Aging; Life cycle; Health insurance; Health care; Pensions; Retirement plans; Discrete choice models
    JEL: I13 I11 J14 J32 H55 D14 D83 D84 D91 C35
    Date: 2016–11–01
  4. By: Strulik, Holger
    Abstract: In this paper, I explore in an overlapping generations framework, a mechanism motivating a neurobiological poverty trap. Poverty causes stress and depression in individuals susceptible to depression. Poor and depressed individuals discount the future at a higher rate and invest less in the human capital of their children than mentally healthy or rich individuals. This gene-environment interaction generates a vicious cycle in which poor individuals inherit not only susceptibility to depression but also stress and poverty. I show that a successful one-time intervention has the power to permanently eliminate the neurobiological poverty trap.
    Keywords: child investment,development,depression,discounting,intergenerational transmission,gene-environment interaction
    JEL: O12 O15 D10 D91 I15 I25 I30
    Date: 2016

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